TMI Blog2024 (2) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... nor CIT(A) has pointed out any defects or discrepancies in the reconciliation submitted by assessee or the documents and evidences furnished by the assessee. Thus, addition made by the AO on account of excess stock found during the course of survey is directed to be deleted - Decided in favour of assessee. - DR. B. R. R. KUMAR, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR US, JUDICIAL MEMBER For the Appellant : Sh. Ved Jain, Adv. Ms. Supriya Mehta, CA For the Respondent : Sh. Amit Katoch, Sr. DR ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of ld. CIT(A)-23, New Delhi dated 31.08.2021. 2. Following grounds have been raised by the assessee: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 6,13,75,028/- made by the AO on account of excess stock found during the course of survey holding the same as unexplained inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o explain it right now . A copy of such statement of Sh. Sanjay Malhotra dated 29.11.2016 and 30.11.2016 recorded during the course of survey. 5. Subsequently, notice u/s 142(1) dated 03.09.2019 was issued and vide Q.36 (PB Pg. 43), the assessee was show caused as to why addition of Rs. 6,13,75,028/- not be made on account of unexplained/ unaccounted stock in the hands of the assessee firm. 6. The assessee submitted that: i. The stock comprising of 30 Kg gold bar approximately was sold on the day before survey and out of which approximately 20 Kg gold bar was undelivered to some of the parties which was kept aside in the premises of the assessee firm. The assessee had prepared all the sale invoices on 28.11.2016 however the goods could not be delivered on the same day and such undelivered goods were kept aside in the premises of the assessee. ii. Moreover, the survey was initiated on 29.11.2016 and got concluded on 30.11.2016, therefore the assessee firm was not in position to deliver the goods to respective parties during this tenure of survey proceedings. iii. However these goods were delivered to the respective parties post survey and copies of acknowledgement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent inquiry made by the AO himself and made an addition of Rs. 6,13,75,028/- on account of unexplained investments u/s 69 of the Act. 10. Aggrieved, the assessee filed appeal before the CIT(A) who affirm the order of the Assessing Officer. 11. During the course of appellant proceedings, assessee reiterated its replies and explained that the difference was on account of goods pertaining to certain parties remaining undelivered and a copy of reconciliation was duly submitted before the AO. It was also submitted by the assessee that neither any defect or discrepancy was pointed out in such evidences furnished by the assessee nor any adverse material was brought on record by the AO to rebut the explanation of the assessee. It was submitted that the AO himself had conducted an independent inquiry from the respective parties and those parties duly submitted their responses acknowledging the delay in delivery of such goods. The addition was made solely on the basis of statement of Sh. Sanjay Malhotra recorded during the course of survey proceedings without bringing any corroborative material on record. It was argued that the assessee has duly reconciled the difference in val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even three months after the survey. Hence, claim of the appellant that excess stock was on account of sale to three parties is held to be an afterthought and this claim of the appellant is hereby rejected. 17. It is relevant to note that the ld. CIT(A) has erred in mentioning the date of recording of statement of Sh. Sanjay Malhotra as the statement of Sh. Sanjay Malhotra was recorded on 29.11.2016 30.11.2016 and not on 10.03.2017. Therefore, the reasoning given by the ld. CIT(A) that assessee has reaffirmed after 3 months for rejecting the explanation of the assessee for difference in stock is incorrect and against the facts and hence not sustainable. It is important to point out no incriminating documents were found during survey. There was no evidence of any sale or purchases outside the books of accounts. The books of accounts with all purchases and sales invoices were available during survey. The contention of the Revenue that it is an afterthought is incorrect, keeping the fact that payment from these parties have been received in bank account as is evident from PB Pg. 98 99 where these payments are credited in the Bank A/c. The sale invoices are dated 28.11.2016 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to Rs. 418,910/-. During the course of assessment proceedings, the assessee submitted a reconciliation explaining the reasons for such difference in terms of stock being valued at market price, not valued at per the specification of particular products, stock received but invoices received after the date of survey etc. The AO has rejected the said reconciliation and explanation so offered along with documentary supporting documentation for the reason that the same was not offered during the course of survey. To our mind, given that the survey was conducted during the middle of the financial year, it is quite likely that there could be some timing mis-match in terms of receipt of physical stock and entries made in the books of accounts and thereafter, once the entries are made in the books of accounts, and necessary reconciliation prepared and submitted, the same should have been examined by the AO and cannot be dismissed summarily. The Id. CIT(A) is also of the same view that the said action of the AO is not justified and where the assessee is able to show with evidence that admission made during survey was mistaken, the same should be examined on merits. The Id. CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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